Ever since the Sept. 11 attacks in the U.S., speculation has been rampant about the extent of al-Qaeda's ambitions in Southeast Asia. Some analysts fingered sprawling, chaotic Indonesia as the possible nexus of an Asian network, pointing to its thousands of radical Muslims fighting bloody private wars against their Christian neighbors. Others suggested the Philippines, whose lawless, predominantly Muslim south harbored well-armed Islamic militias that have been waging war against the central government for decades. Very few suspected peaceful, relatively prosperous Malaysia, where Muslims make up two-thirds of the population but seemed to have bought into the consumerist, essentially pro-Western views espoused by their leaders.

But after months of investigation and hundreds of hours interrogating detained terrorist suspects, even government officials in Kuala Lumpur can no longer deny that Malaysia was the financial and planning center for the region's main al-Qaeda-linked terrorist network, the place Osama bin Laden's proselytizers chose to recruit a core of loyal followers, launch new groups into neighboring countries, and coordinate with Southeast Asia's existing Islamic radicals. Increasingly, it seems clear Malaysia was one of a number of hubs used in the worldwide preparations for the carnage of Sept. 11 in the U.S.

If that isn't shocking enough, consider this: the networks are still thriving. Underworld figures involved in Southeast Asia's flourishing illicit trade in arms assert—and senior Malaysian government officials acknowledge—that representatives from the region's most notorious and violent radical Islamic groups still regularly gather in Malaysia to meet with their al-Qaeda backers. Listen to Mat, a pony-tailed Indonesian who has been trading illegal arms for 20 years. "How stupid can you be? Of course al-Qaeda is still here in Malaysia," he snorts. "This is their favorite place to have meetings with the other radical Islamic groups in the region."

Mat says the crackdown by police since the Sept. 11 attacks has yet to interfere seriously with his business, either with ordinary criminal groups or with regular customers from a laundry list of Asian Islamic militant organizations that he says are funded in part by al-Qaeda: the Moro Islamic Liberation Front (MILF) and Abu Sayyaf from the Philippines, the Laskar Jihad and Free Aceh Movement from Indonesia and Malaysia's own Kumpulan Mujahideen Malaysia (KMM).

To learn that terrorist groups continue to hold such meetings with apparent impunity is especially alarming in light of new details interrogators have gleaned from the roughly 50 terrorist suspects being held in Malaysian jails. For the first time, police have a detailed picture of how al-Qaeda stepped in and—mostly through the liberal use of cash and the services of two Indonesian clerics who acted as proxies—managed to transform a radical Muslim group preoccupied with domestic concerns into a band of foot soldiers in Osama bin Laden's crusade against the U.S.

Malaysia is, in the words of one U.S. official, "a perfect place for terrorist R. and R.," where Islamic radicals from around the region and their al-Qaeda backers can meet. The most notorious gathering of al-Qaeda operatives took place in January 2000 and involved two hijackers who died in the suicide attack on the Pentagon, the roommate of a third hijacker and at least one of the suspects in the U.S.S. Cole bombing. Zacarias Moussaoui, the Algerian-born French citizen now in custody in Virginia—the so-called 20th hijacker—also made several visits to Malaysia. Last week Washington labeled the country a staging area for the U.S. attacks, a charge that has put the Malaysian government on the defensive. "Malaysia is definitely not a primary launchpad for terrorists' activities," says a government official. "But it appears that Malaysia was used as a convenient meeting and transit point by some of these people from the radical groups."

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